Correlation Between IShares MSCI and Barclays ETN

Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Barclays ETN at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares MSCI and Barclays ETN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares MSCI Global and Barclays ETN Select, you can compare the effects of market volatilities on IShares MSCI and Barclays ETN and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares MSCI with a short position of Barclays ETN. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Barclays ETN.

Diversification Opportunities for IShares MSCI and Barclays ETN

-0.11

Correlation Coefficient

IShares MSCI  Barclays ETN

Good diversification

The 3 months correlation between IShares and Barclays is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Global and Barclays ETN Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays ETN Select and IShares MSCI is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares MSCI Global are associated (or correlated) with Barclays ETN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays ETN Select has no effect on the direction of IShares MSCI i.e., IShares MSCI and Barclays ETN go up and down completely randomly.

Pair Corralation between IShares MSCI and Barclays ETN

Given the investment horizon of 90 days iShares MSCI Global is expected to under-perform the Barclays ETN. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI Global is 1.35 times less risky than Barclays ETN. The etf trades about -0.53 of its potential returns per unit of risk. The Barclays ETN Select is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  2,944  in Barclays ETN Select on September 22, 2024 and sell it today you would lose (156.00) from holding Barclays ETN Select or give up 5.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

iShares MSCI Global  vs.  Barclays ETN Select

iShares MSCI Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Barclays ETN Select

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays ETN Select are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Barclays ETN may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares MSCI and Barclays ETN

The main advantage of trading using opposite IShares MSCI and Barclays ETN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Barclays ETN can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Barclays ETN will offset losses from the drop in Barclays ETN's long position.

The idea behind iShares MSCI Global and Barclays ETN Select pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..